Question

Metlock Company has the following balances in selected accounts on December 31, 2022.

Accounts Receivable

$ 0

Accumulated Depreciation—Equipment

0

Equipment

7,840

Interest Payable

0

Notes Payable

11,200

Prepaid Insurance

2,352

Salaries and Wages Payable

0

Supplies

2,744

Unearned Service Revenue

33,600

All the accounts have normal balances. The following information has been gathered at December 31, 2022.

1. Metlock Company borrowed $11,200 by signing a 12%, one-year note on September 1, 2022. Interest will be paid when the note is repaid.

2. A count of supplies on December 31, 2022, indicates that supplies of $1,008 are on hand.

3. Depreciation on the equipment for 2022 is $1,120.

4. Metlock paid $2,352 for 12 months of insurance coverage on June 1, 2022.

5. On December 1, 2022, Metlock collected $33,600 for consulting services to be performed evenly from December 1, 2022, through March 31, 2023.

6. Metlock performed consulting services for a client in December 2022. The client will be billed $4,704.

7. Metlock pays its employees total salaries of $10,080 every Monday for the preceding 5-day week (Monday through Friday). On Monday, December 29, employees were paid for the week ending December 26. All employees worked the last 3 days of 2022.

Prepare adjusting entries for the seven items described above. Metlock prepares adjustments annually. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

No.

Account Titles and Explanation

Debit

Credit

1.

Enter an account title

Enter a debit amount

Enter a credit amount

Enter an account title

Enter a debit amount

Enter a credit amount

2.

Enter an account title

Enter a debit amount

Enter a credit amount

Enter an account title

Enter a debit amount

Enter a credit amount

3.

Enter an account title

Enter a debit amount

Enter a credit amount

Enter an account title

Enter a debit amount

Enter a credit amount

4.

Enter an account title

Enter a debit amount

Enter a credit amount

Enter an account title

Enter a debit amount

Enter a credit amount

5.

Enter an account title

Enter a debit amount

Enter a credit amount

Enter an account title

Enter a debit amount

Enter a credit amount

6.

Enter an account title

Enter a debit amount

Enter a credit amount

Enter an account title

Enter a debit amount

Enter a credit amount

7.

Enter an account title

Enter a debit amount

Enter a credit amount

Enter an account title

Answer 1

Adjusting entries for the seven items described of Metlock Company			Amount in $
Sr No.	Account Title	Dr/Cr	Debit Amount	Credit Amount
1	Interest Expense	Dr	448
	Interest Payable	Cr		448
	( To record interest expense for 4 months $11,200×12%×4/12)
2	Supplies Expense	Dr	1,736
	Supplies	Cr		1,736
	( To record supplies expense for the year $2,744 -$1,008)
3	Depreciation Expense	Dr	1,120
	Accumulated depreciation - equipment	Cr		1,120
	( To record depreciation expense for the year)
4	Insurance Expense	Dr	1,372
	Prepaid Insurance	Cr		1,372
	( To record insurance expense for the year $2,352×7/12)
5	Unearned Service Revenue	Dr	8,400
	Service Revenue	Cr		8,400
	( To record service revenue for the month of December $33,600/4)
6	Unbilled Revenue	Dr	4,704
	Service Revenue	Cr		4,704
	( To record unbilled revenue)
7	Salaries and Wages Expense	Dr	6,048
	Salaries and Wages Payable	Cr		6,048
	( To record salary expense for last 3 days $10,080×3/5)